Will the Next share price be affected by 2 insiders selling?

With two of the retailer’s directors offloading £31.8m of shares, our writer considers what might happen to the Next share price.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Man writing 'now' having crossed out 'later', 'tomorrow' and 'next week'

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Since 11 October 2022, the Next (LSE:NXT) share price has been the fourth-best performer on the FTSE 100. Beaten only by 3i Group, Marks and Spencer and Rolls-Royce Holdings, the retailer has managed to deliver exceptional share price growth by selling mass-market-to-premium clothing and homewares.

Insider transactions

However, over the past three weeks, two of the company’s directors have been reducing the size of their shareholdings.

In late September, Lord Wolfson, the chief executive, sold 290,000 shares for £29.23m (£100.08 a share). On 9 October, Jeremy Stakol (and his wife) disposed of £2.6m of stock. The CEO of its Lipsy unit sold at an average price of £98.79.

Should you invest £1,000 in Windward right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Windward made the list?

See the 6 stocks

As a shareholder, I try to ignore the commentary surrounding such sales.

There are many personal reasons why someone might want to dispose of their shares. And I don’t think it’s unreasonable for an individual who has a large proportion of their wealth tied up in one investment to — periodically — convert some of it into cash. After all, you can’t spend shares.

But as with so many things in life, timing is everything.

These disposals occurred after the company issued its half-year results for its 2025 financial year (FY25). It issued another earnings upgrade and now expects to record a FY25 profit before tax of £995m.

That’s probably why — as I write (11 October) — the company’s share price remains above £100. Investors don’t appear to be too alarmed by these insider transactions.

Inside the boardroom

Like me, I suspect they have confidence in the leadership of Lord Wolfson. When he took over the running of the business in August 2001, he was the FTSE 100’s youngest CEO.

Back then, the company’s share price was around 940p. An investment of £10,000 at the time would now be worth more than £107,000. No wonder his total remuneration package was £4.52m last year.

Created with Highcharts 11.4.3Next Plc PriceZoom1M3M6MYTD1Y5Y10YALL1 Apr 20035 Apr 2025Zoom ▾2004200620082010201220142016201820202022202420052005201020102015201520202020www.fool.co.uk

Of course, nothing is guaranteed when it comes to investing. History doesn’t necessarily repeat itself.

However, all of Next’s directors are participants in the company’s long-term incentive plan. They receive 100% of their bonus if the retailer can deliver total shareholder returns — over three years — greater than 80% of 20 other listed “broadly comparable” businesses.

This seems like a sensible metric for measuring performance. And it means the interests of the directors are closely aligned with mine.

As the table below shows, since August 2020, very few have done better than Next.

Source: 2024 annual report

Despite the impressive growth in its share price and earnings, the stock trades on a reasonable forward price-to-earnings ratio of 14.2.

Okay, it’s not in bargain territory — it’s broadly in line with its average over the past 20 years — but it suggests to me that the shares aren’t unreasonably priced.

Possible challenges

However, keeping its clothing relevant is a constant challenge. It’s also vulnerable to the rise of ‘fast fashion’ and others producing cheap imitations.

In addition, it’s heavily exposed to the domestic economy — 84% of its revenue came from the UK in FY24. A fall in disposable incomes would affect its sales and earnings.

But over the past two decades, under Lord Wolfson’s stewardship, the company’s overcome many challenges. It’s done better than many of its rivals and I see no obvious reason why this can’t continue.

But there may be an even bigger investment opportunity that’s caught my eye:

Investing in AI: 3 Stocks with Huge Potential!

🤖 Are you fascinated by the potential of AI? 🤖

Imagine investing in cutting-edge technology just once, then watching as it evolves and grows, transforming industries and potentially even yielding substantial returns.

If the idea of being part of the AI revolution excites you, along with the prospect of significant potential gains on your initial investment…

Then you won't want to miss this special report inside Motley Fool Share Advisor – 'AI Front Runners: 3 Surprising Stocks Riding The AI Wave’!

And today, we're giving you exclusive access to ONE of these top AI stock picks, absolutely free!

Get your free AI stock pick

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

James Beard has positions in Next Plc and Rolls-Royce Plc. The Motley Fool UK has recommended Rolls-Royce Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Calendar showing the date of 5th April on desk in a house
Investing Articles

Here’s how a £20k ISA could produce £1,580 of passive income in the next year

A Stocks and Shares ISA stuffed with dividend shares can be a lucrative source of passive income. Christopher Ruane explains…

Read more »

Investing Articles

Prediction: 12 months from now, £5,000 invested in Tesla stock could be worth…

Tesla stock has endured a miserable year so far, falling by 29%. Muhammad Cheema takes a look at how it…

Read more »

Investing Articles

See what £10,000 invested in Tesla shares at their mid-December peak is worth today 

As the world absorbs the full scale of Donald Trump's tariffs, Tesla shares are reeling. Investors who bought the stock…

Read more »

Hand flipping wooden cubes for change wording" Panic " to " Calm".
Dividend Shares

2 ‘safe’ LSE dividend stocks to consider as global markets sell off

As global markets experience high levels of volatility due to economic uncertainty, investors are piling into these ‘safe-haven’ dividend stocks.

Read more »

Investing Articles

US stock market rout: an unmissable opportunity for investors?

His tech-heavy portfolio has been smashed by Trump’s tariffs. However, Dr James Fox believes there could be some opportunities in…

Read more »

Investing Articles

After a 13% ‘Trump tariff’ fall, is the Barclays share price too cheap to miss?

Does the Barclays share price fall mean we should all panic and run screaming from the stock market? Nah, of…

Read more »

Mature Caucasian woman sat at a table with coffee and laptop while making notes on paper
Investing Articles

2 investment trusts to consider for a Stocks and Shares ISA

These two investment trusts have a different focus -- but our writer sees both as worth considering, one more for…

Read more »

Investing Articles

Deutsche Bank reiterates Buy rating on 9.6% yielding FTSE 250 stock that was “most shorted in UK”

Our writer investigates why a major broker remains optimistic about a FTSE 250 stock that was once the most shorted…

Read more »